| US Appears To Have Fought War For Oil And Lost It
By Ian Rutledge
Published: April 11 2005 03:00 | Last updated: April 11 2005 03:00
From Dr Ian Rutledge. Sir, Your recent report that oil prices have reached an all-time nominal high and that Goldman Sachs has suggested the possibility of a "super spike" in prices to as high as $105 per barrel ("Crude at all-time high despite Opec's efforts", April 5) should be of no surprise to anyone who has studied the informed opinions of US energy experts in the period leading up to the invasion of Iraq. Nor, for that matter, to anyone who has seen my own observations on future world oil prices in my recent book Addicted to Oil. In a crucial report to President George W. Bush by the US Council on Foreign Relations in April 2001, the president was warned that: "As the 21st century opens, the energy sector is in a critical condition. A crisis could erupt at any time . . . Theworld is currently close to utilising all of its available global oil production capacity, raising the chances of an oil supply crisis with more substantial consequences than seen in three decades." With US oil consumption in 2001 at an all-time high (19.7m b/d), import penetration at 53 per cent, and dependence on Arabian Gulf oil also at an all-time record (14.1 per cent of total US domestic and foreign supplies), the council stated that it was absolutely imperative that "political factors do not block the development of new oil fields in the Gulf" and that "the Department of State, together with the National Security Council" should "develop a strategic plan to encourage reopening to foreign investment in the important states of the Middle East". But while the council argued that "there is no question that this investment is vitally important to US interests" it also acknowledged that "there is strong opposition to any such opening among key segments of the Saudi and Kuwaiti populations". However, there was an alternative. In the words of ESA Inc (Boston), the US's leading energy security analysts: "One of the best things for our supply security would be liberate Iraq"; words echoed by William Kristol, the Republican party ideologist, in testimony to the House Subcommittee on the Middle East on May 22 2002 that as far as oil was concerned, "Iraq is more important than Saudi Arabia". So when, according to the former head of ExxonMobil's Gulf operations, "Iraqi exiles approached us saying, you can have our oil if we can get back in there", the Bush administration decided to use its overwhelming military might to create a pliant - and dependable - oil protectorate in the Middle East and achieve that essential "opening" of the Gulf oilfields. But in the words of another US oil company executive, "it all turned out a lot more complicated than anyone had expected". Instead of the anticipated post-invasion rapid expansion of Iraqi production (an expectation of an additional 2m b/d entering the world market by now), the continuing violence of the insurgency has prevented Iraqi exports from even recovering to pre-invasion levels. In short, the US appears to have fought a war for oil in the Middle East, and lost it. The consequences of that defeat are now plain for all to see. Ian Rutledge, Chesterfield S40 4TR | 
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